NCUA Extends Opt-In Deadline For Credit Unions Eligible For Low Income Designation

September 13, 2012 at 7:23 am 2 comments

NCUA announced late yesterday afternoon that only 553 of the approximately 1,000 federally chartered credit unions informed by NCUA earlier this summer that they qualified for low income designation had opted into the program.  As a result, the deadline for opting in has been extended for another 30 days.  NCUA made the announcement in a press release emphasizing the positive aspects of this initiative.  For example, the agency noted that the newly designated LICUs serve 5.9 million members and manage $49 billion in assets.

The  hesitancy of credit unions to be classified as low income is a real head-scratcher to me, folks, and anyone who wants to offer an explanation as to why credit union enthusiasm for this program is lacking should let me in on it.  A  Low-Income Credit  Union is eligible to receive secondary capital; is not subject to the  12.25% member business loan cap and is eligible to receive funds from the Community Development Revolving Loan Fund.  In short, credit unions accepting this designation are achieving through regulation what has so far proven impossible to achieve legislatively.

NCUA did not qualify credit unions as LICUs that were not previously eligible for the designation; it just did the paper work on their  behalf, apparently assuming, as did I, that credit unions simply did not have the time to get qualified.  It sent them letters informing them that they could participate in the program by  accepting the designation.

If another 30 days go by and there are still hundreds of credit unions that have not opted in to the designation, then I can only assume that credit unions are concerned that LICU status  will hurt their reputation with the larger public, perhaps feeling that fewer people would be confident placing their money in a low income institution.  But remember,  simply because you are a low-income credit union doesn’t mean you have to advertise that fact.  In any event we are an  industry dedicated, in part, to helping people of modest means and it does not reflect well on our efforts if hundreds of credit unions do not take advantage of regulations intended to further that goal.

Even those credit unions not eligible for low income credit union designation have a stake in this effort.  NCUA has taken steps lately to strengthen the federal credit union charter.  If we want our regulator to continue to aggressively interpret regulations for the benefit of our members in the future, then we should show them that their efforts are worth it.

Entry filed under: Advocacy, Compliance, Regulatory. Tags: , , , .

Good News for Mortgage Lenders! No one is ever going to accuse Federal Reserve Chairman Ben Bernanke of not trying; the question is: are his efforts doing any good?

2 Comments Add your own

  • 1. Anonymous  |  September 13, 2012 at 9:35 am

    Well said Henry, GPO signed up weeks ago.

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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